Social license: why it matters and should be a focus for all clubs

Social license is not a term to be taken lightly. Indeed, it is only by building social license that a club truly represents its community and stands itself in good stead to exist into the future.

Queensland’s club sector is facing both an opportunity and a challenge the likes of which has never before existed; and the opportunity can only be realised and the challenge overcome if the industry can work together to build its social license in the communities the clubs are nestled within.

Clubs have an important role in the community and those of us working in them, understand this. But have we have failed in explaining our value to our members, neighbours and those within our regions?

And until we do make our own case, we risk losing the social license we have to operate which will ultimately lead to club closures and a lack of support from regulators.

Sarah Ramsay, author of KPMG’s 2018 Sustainability of Queensland Clubs report commissioned by Clubs Queensland, said there remains a very real need for clubs to actively work to build their social license. 

“Any venture needs a legal license to operate,” Ramsay, Associate Director with KPMG Australia, explained. 

“But increasingly they also need a social license - the acceptance of what they do by the community and important stakeholders. A social license is not something that can be bought or sold, but rather requires ongoing investment and communication over the longer term. 
“Clubs exist to support communities. Staying true to that purpose, acting on it, demonstrating it in all they do and communicating it will help build social license.”

Laura Bos, Clubs Queensland Marketing and Government Relations Manager, concurred adding that many in the clubs sector had a long way to go in demonstrating their value - and thus building social license.

“Community clubs are custodians of a difficult set of products - gaming and alcohol,” Bos said. “We were given these products because of our community license and what was envisioned was we would be of benefit to the community as not-for-profit, social enterprises.

“But we have not prosecuted this case as well as we could or should have.

“Clubs have been made custodians of these products because we put money back into the community. Casinos have been given these products because they build infrastructure and are revenue making machines. They are completely different beasts.

“The social license for casinos is that the government extracts money out of them for the benefit of the country.

“For clubs, our social license has more to do with linking and giving back to local communities and being a source of support from sponsoring local community and sporting clubs to providing discount meals for seniors. It is very tangible and ongoing.”

The Adani example

Bos is emphatic that when it comes to social license, the clubs sector can learn a lot from Indian mining giant Adani.

At first this may seem preposterous, but think about it. Adani is one of a number of proponents wanting to build mega-mines in central Queensland. There would be few Queenslanders who have not heard about Adani.

The same cannot be said for the rest of Australia.

“Adani is a great example of building social license,” Bos said.

“What Adani did was absolutely prosecute its case around we care about you. They built their whole platform around social credibility, how they directly impact on the local community from providing employment, supporting local suppliers, donating to schools, providing health care services and child care an all these other services the local community has benefitted from.

“And Adani did a brilliant job of building their case. The government has had to sit up and take notice of the strong local support for the Adani mine in the face of very vocal anti-mining protests outside of the region.”

Throughout Queensland, more than 1,000 community clubs boast 2.4 million members. To put this into perspective, there are 3.4 million registered voters in the state; voters who helped to determine the outcome of the last Federal election. And in no small part because of Central Queensland support for Adani.

Reaching your community 

KPMG’s Ramsay said clubs can become complacent about their social license instead focusing their energies on the operational aspects of running the club.    
“There is a risk social license can be taken for granted,” she said. “And clubs face very real challenges in staying focused on social license.  

“After all clubs have to exist in a commercial world. They have to compete and make money. Without it, they can’t fulfil their purpose. 

“If they focus all their effort on the commercial aspects of their operation they can come across as just another business. And then the community and government will treat them like they treat many businesses, which is a real risk for the regulatory and legislative concessions clubs receive.”  

Bos said there were three pillars of social license:
  • Legitimacy
  • Credibility
  • Trust
“There is a definite argument around what we provide and whether we have a legitimate right to provide alcohol and gaming,” Bos continued. “We need to prosecute the case that we are providing employment and entertainment and social interaction, which is quite important in disparate and in urban communities where you are starting to get that social isolation.

“I think we can do a little better on the credibility side of it,” she said about community clubs in Queensland.

“And we are to build and keep trust; we need to do what we say we will do. That means giving back to the community. That means responsible service of alcohol and gaming and promoting and providing a safe environment.”

The role of government

Ramsay believes social license is inherently tied to community support and advocacy, and that without it, government will be less inclined to outwardly advocate or support industry changes.

“Without social license, governments and regulators will act to limit or shut down the operation just as quickly as if legal licenses were absent,” she said. “We have seen this in resources and the clubs industry is no different. 

“The stronger their social license, the more government will support them and put in place a regulatory regime that allows them to thrive.”

Bos said the need to build relationships between the clubs sector and local politicians had never been greater, adding government wants to see clubs are truly supporting their communities, have credible management and can deliver on responsible gaming.

“If we want regulatory reform, we need to make our case for what we do,” she continued. “In terms of prosecuting our case to government about what we do because it is becoming quite clear that the government view is that we are not doing enough.

“There is a perception that clubs are not managing gaming machines as well as casinos. We need to work hard to prove that we are credible operators and that we are giving back to the community.

“When we have the support of local politicians who understand what a community club does for its members and community, the more likely they are to advocate for the club and that is something which is invaluable.

“At the end of the day, for the club sector, if we want some of the regulatory reform we are after it is crucial we build social license and that has to come from the community.”

Member engagement

Ramsay said the KPMG report she authored spoke a lot about the need for diversification if clubs are to be successful as commercial entities. And this was often where the disconnect between commercial imperatives and the perceived needs of the members can be at odds, impacting a club’s social license.

The report goes so far as to say:  “Creating a social license for change involves engaging with the community and building / testing that there is a broad base for support for the direction a club is seeking to take”.

Ramsay added: “A lot of things have to come together to make a property deal, for example, successful for a club. And it’s not just financial viability. 

“Just because something is do-able, doesn’t mean the local community, or club members will want to do it. It’s the difference between ‘can we' and ‘should we’. 

“’Should we’ takes into account the views of the community, or in other words whether social license for the idea exists.”

Bos said it was important to remember that the size of a club does not necessarily reflect its social license to operate; this instead is determined by what it does for the community, not a profit and loss sheet.

“Sometimes the smallest clubs have the biggest social license to operate,” she continued. “There are some cases where the club is critical to the fabric of that community and that can’t be quantified by size.

“A small club in a regional town proving meaningful support to its community may well have a stronger social license than club with 300 gaming machines. It’s important we remember that.”

Building social license

Ramsay added clubs “play a vital role” in communities well in excess of providing food, beverages and entertainment and act an “enablers” of the fundamental purpose of the club which is to support the community, all of which help to build social license.

“Social license is built through various stages,” she said. “But ultimately the place you want to be is to have a sense of partnership with the community. Real trust. 

“Clubs should aspire to build partnerships and ultimately trust. Their purpose aligns to community and so with careful nurturing the community can become a club’s true partner and defensive and protective of the relationship.  That’s what clubs should strive for.”

“And if you can get there, then the community will defend you and advocate for you against noisy opponents. But just like with personal relationships, trust can’t be built without a lot of honest two-way communication. Clubs need to first listen and understand public and government perceptions before seeking to persuade, influence, and be understood.
For Bos, building social license is about demonstrating to the community, that their support is support for the wider community and not a profit-seeking business.

“Members want to see what is legitimately put back into the community by clubs,” she said. “And the fact is, there is some great work being done by clubs, it’s just not being promoted or recognised.

“Surf clubs are able to demonstrate where the money goes with the beach patrols. Other clubs can’t always offer that visual reminder. This is where adding a notation on a meal receipt or menu about what community donations are made goes a long way to reaching members and guests and telling your clubs story.

“That makes the patrons feel good about their purchase and this is important.”

The cost of ignoring social license

Ramsay said clubs ignoring the need to build and maintain a social license to operate jeopardises their sustainability.

"Ignoring social license is a risky strategy,” she said. 

“Without it, what’s to stop government and regulators treating clubs like any other business? 

“In the short term, a club that ignores social license maybe can remain viable. But in the longer term, it’s the social license of the entire industry and building stronger linkages between community and government that will create real sustainability.”

She added that while it is likely some club patrons had an appreciation of the mandate of clubs to be non-profit entities which give back to their communities; many would not understand the true value and benefit of community clubs. 

“But whose obligation is it to explain that?” she asked.